Government Contracts: OFCCP Compensation Audits Might Change

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The OFCCP might make compensation audits more fair for government contractors.

Recent discussions inside the Office of Federal Contractor Compliance Programs (“OFCCP”) indicate that compensation audits of federal contractors might become more fair for employers.  On April 19, 2018, Bloomberg News released an article indicating that OFCCP was contemplating significant changes to its audit rules.  Here’s a link to the Bloomberg article: Bloomberg OFCCP Article.  The OFCCP conducts audits of government contracts and federal contractors to ensure that employers are complying with federal laws and regulations prohibiting pay discrimination.  Under the Obama Administration, the OFCCP issued Directive 307, which allows auditors to compare compensation of employees even if they perform different work.  For example, auditors might find discrimination by comparing the compensation of two “managers,” even though one manager works in accounting and the other in human resources.

Comparisons of dissimilar employees are generally not permitted in discrimination cases arising under Title VII of the Civil Rights Act of 1964.  Instead, an employee suing for pay discrimination must usually compare themselves to another employee doing the same work, in the same location, with the same supervisors.  Because of the discrepancies between OFCCP’s enforcement efforts and traditional employment law, the U.S. Chamber of Commerce released a report in late 2017 critical of the OFCCP.  It’s report, “OFCCP, Right Mission, Wrong Tactics” can be found here.

The Bloomberg article indicates that the OFCCP is about to scrap or significantly change Directive 307.  That’s good news for federal contractors, who need consistency in the law to succeed in business.  Unfortunately, the Bloomberg article caused some concern among civil rights groups, and an article from the Society for Human Resource Management (which can be found here) indicates the OFCCP’s plans may be delayed.  Even with the delays, the information coming from OFCCP is good news for government contractors, because it indicates a willingness by OFCCP to address employer concerns.

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